After Earnings, Is Ford Stock a Buy, a Sell, or Fairly Valued?

Ford Motor F released its fourth-quarter earnings report on Feb. 10. Here’s Morningstar’s take on Ford’s earnings and stock.

Key Morningstar Metrics for Ford Motor

• Fair Value Estimate: $16.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of Ford Motor’s Q4 Earnings

Ford’s fourth-quarter 2025 adjusted diluted EPS of $0.13 missed the $0.19 LSEG consensus, but the stock rose slightly in after-hours trading after Ford provided strong 2026 adjusted EBIT guidance of $8 billion to $10 billion.

Why it matters: Going into earnings, 2026 guidance, and the Novelis plant fire impact on aluminum for F-Series production were two main points of concern. EBIT guidance at the midpoint is 32% higher than 2025’s $6.8 billion, and Novelis took $2 billion from 2025 EBIT, as did net tariff costs.

• The 2026 total company EBIT will be skewed toward the second half of the year once the Novelis plant resumes operations, likely between May and September. Ford is importing additional aluminum, which will add $1.5 billion-$2 billion in 2026 costs, but Novelis will take $1 billion from 2026 EBIT.
• A $1 billion reduction in materials and warranty costs, along with $1 billion less tariff impact, is expected to offset higher input costs for items such as computer memory, keeping overall costs flat versus 2025. Guidance assumes US industry sales in the high-15 million to low-16 million units.

The bottom line: We maintain our fair value estimate of $16 for no-moat Ford, and we will reassess all modeling inputs when we roll our model forward for the 10-K. We are glad to see continued progress in cost control and see potential for positive 2026 earnings surprises, provided no US recession.

• Cash outflow for EV impairments (see our Dec. 16 note) remain $5.5 billion across 2026-27. The pivot from EVs to create the Ford Energy storage business will cost $2 billion, with $1.5 billion of that in 2026. Ford has excellent auto liquidity of $49.8 billion, including $28.7 billion in cash.
• CEO Jim Farley talked about the cost benefits for Europe of partnering with VW and Renault. Recent media reports indicate that Chinese automaker Geely may be using excess Ford capacity in Spain, so we would not be surprised to see an announcement this year on more partnering.

Fair Value Estimate for Ford Motor

With its 3-star rating, we believe Ford’s stock is fairly valued compared with our long-term fair value estimate of $16 per share. After updating our model for Ford’s Dec. 15 EV restructuring and 2025 guidance increase, we are leaving our fair value estimate unchanged at $16 per share. We have revised our 2025 adjusted EBIT forecast to $6.9 billion. Average EBIT margin excluding equity income is 3.6%, and our midcycle margin for this metric is about 5%.

Read more about Ford Motor’s fair value estimate.

Economic Moat Rating

Ford does not have a moat, and we do not expect that to change, as there are too many obstacles to deal with at once. Vehicle manufacturing is a very capital-intensive business, but barriers to entry are not as high as in the past. The industry is already full of strong competition, so it is nearly impossible for one firm to gain a durable advantage over another. Foreign automakers from China may soon enter developed markets such as the US as they already have in Europe, and South Korea’s Hyundai and Kia as well as Tesla have become formidable competitors. Nascent EV makers such as Rivian and Lucid could also be a formidable threat one day if they survive. Furthermore, the auto industry is so cyclical that in bad times even the best automakers cannot avoid large declines in return on invested capital and profit. Cost-cutting helps ease the pain, but it does not restore all lost profit.

Read more about Ford Motor’s economic moat.

Financial Strength

Year-end 2024 global pension underfunding totaled about $547 million compared with about $8.2 billion at year-end 2015, while salaried employee retiree healthcare adds another $4.4 billion of shortfall. Nearly all underfunding is from pay-as-you-go plans (mostly from Germany and US senior management plans) that are always unfunded and pay benefits paid from general corporate cash. Management often guides funded plan contributions to be limited to annual service cost. 2025 funded plan contributions are guided to about $800 million, plus about $450 million of benefit payments for unfunded plans. Unfunded plan benefit payments will likely be around $400 million annually in our view.

Comments at analyst days indicate that share repurchases are possible but will probably be done only to offset dilution from stock options. Ford’s dividend is back to its pre-pandemic level, and special dividends are possible and were declared for 2023-25.

Read more about Ford Motor’s financial strength.

Risk and Uncertainty

Our Uncertainty Rating for Ford is High. Ford is spent tens of billions since 2022 betting consumers will switch to electric vehicles, and so much capital was wasted once that adoption proved too slow following regulatory changes in the United States. Barriers to entry are declining as a growing global market reduces fixed costs as a percentage of sales for new entrants. Macroeconomic conditions, rising interest rates, commodity prices, and trade agreement and tariff changes in key markets, such as the US, Europe, and China, can quickly derail management’s plans and guidance, while significant disruption is on the horizon as vehicles become more high-tech and autonomous.

Ford’s union relationships historically have been better than GM’s. However, UAW President Shawn Fain in 2023 said Ford and the UAW are no longer working together as a team. We are concerned about a very long strike in May 2028 because the UAW wants to resume pensions and retiree healthcare for all its workers, which we don’t see as affordable.

One of the largest environmental, social, and governance risks we see with Ford is increasing regulatory scrutiny on combustion vehicles, but electric vehicles such as the Mach-E and F-150 Lightning show Ford is serious about switching away from combustion, and the regulatory environment is not as severe as it had been.

Read more about Ford’s risk and uncertainty.

F Bulls Say

• Ford’s turnaround will take lots of time due to many restructuring projects around the world, but partnerships like Renault may help share cost burdens, and the Model e is guided to be profitable in 2029.
• Ford is focusing its investments where it gets the best return, which is why mostly exiting North American car segments and production in South America was the right move, in our opinion.
• Software and data services for fleet customers are a new and lucrative margin stream for Ford compared with just selling the vehicle.

F Bears Say

• The auto industry is very cyclical, and Detroit automakers have lost significant US market share to foreign automakers for years at a time. Competition has never been more fierce.
• Long-term profitability could be hindered by unions, which have recently become more powerful. Major nonunionized import automakers in the US mostly do not have this problem for now.
• Ford’s stock can sell off heavily on macroeconomic fears, even if the company itself is doing well. Furthermore, it takes significant investment to fund growth in the auto industry, which limits potential margin expansion.

This article was compiled by Rachel Schlueter.